Butler Machine Tool v Ex-Cell-O Corp [1977]
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Butler Machine Tool Co Ltd v Ex-Cell-O Corp (England) Ltd [1977] EWCA Civ 9 is a significant English contract law case that addresses the common issue in commercial transactions known as the battle of forms. This scenario often arises when large businesses attempt to establish contracts using their preferred standard form agreements.
Butler Machine Tool Co Ltd, a company manufacturing and selling machine tools, offered to sell machinery to Ex-Cell-O Corp on May 23, 1969, for £75,535, including standard contract terms. Ex-Cell-O responded on May 27, accepting the offer but using its own standard terms, which lacked a price variation clause present in Butler's terms. Butler replied on June 5, completing and returning a tear-off slip from Ex-Cell-O's terms, explicitly stating, "We accept your order on the terms and conditions stated therein." However, Butler added a letter reasserting that the agreement was made under Butler's own terms. Later, when Butler delivered the machinery, they requested the additional amount of £2,892 according to their price variation clause. Ex-Cell-O refused to pay the extra amount, leading Butler to file a lawsuit.
The Court of Appeal held that the contract was formed on Ex-Cell-O's terms, making the price increase ineffective. The majority applied a traditional offer and acceptance analysis. Lord Denning MR, however, introduced a broader approach, suggesting that the court should look for a material agreement and should have the power to ignore irreconcilable terms.
Lord Denning referred to the case as a battle of forms and highlighted the importance of examining all documents exchanged between the parties. He expressed sympathy with the idea that the traditional analysis of offer, counter-offer, acceptance, etc., might be outdated in such cases. Instead, he suggested looking at the documents as a whole to determine if the parties had reached an agreement on all material points.
Lord Denning emphasised that in a battle of forms, a contract arises when the last form is sent and received without objection. He acknowledged that difficulties may arise in deciding which form or part of a form constitutes a term or condition of the contract. The court should consider whether the forms can be reconciled, and if irreconcilable differences exist, conflicting terms may be scrapped and replaced by a reasonable implication. Lord Denning concluded that the acknowledgment of June 5, 1969, was the decisive document. It made it clear that the contract was on the buyer's terms, excluding Butler's price variation clause. Therefore, the appeal was allowed, and judgment was entered for the defendants.
This case is significant in contract law, particularly in the context of battles of forms in commercial transactions. It introduces a more flexible approach, emphasising the need to consider all documents exchanged between parties to determine the terms of the contract. The traditional offer and acceptance analysis is seen as potentially outdated in modern commercial practices involving standard form agreements.
Butler Machine Tool Co Ltd, a company manufacturing and selling machine tools, offered to sell machinery to Ex-Cell-O Corp on May 23, 1969, for £75,535, including standard contract terms. Ex-Cell-O responded on May 27, accepting the offer but using its own standard terms, which lacked a price variation clause present in Butler's terms. Butler replied on June 5, completing and returning a tear-off slip from Ex-Cell-O's terms, explicitly stating, "We accept your order on the terms and conditions stated therein." However, Butler added a letter reasserting that the agreement was made under Butler's own terms. Later, when Butler delivered the machinery, they requested the additional amount of £2,892 according to their price variation clause. Ex-Cell-O refused to pay the extra amount, leading Butler to file a lawsuit.
The Court of Appeal held that the contract was formed on Ex-Cell-O's terms, making the price increase ineffective. The majority applied a traditional offer and acceptance analysis. Lord Denning MR, however, introduced a broader approach, suggesting that the court should look for a material agreement and should have the power to ignore irreconcilable terms.
Lord Denning referred to the case as a battle of forms and highlighted the importance of examining all documents exchanged between the parties. He expressed sympathy with the idea that the traditional analysis of offer, counter-offer, acceptance, etc., might be outdated in such cases. Instead, he suggested looking at the documents as a whole to determine if the parties had reached an agreement on all material points.
Lord Denning emphasised that in a battle of forms, a contract arises when the last form is sent and received without objection. He acknowledged that difficulties may arise in deciding which form or part of a form constitutes a term or condition of the contract. The court should consider whether the forms can be reconciled, and if irreconcilable differences exist, conflicting terms may be scrapped and replaced by a reasonable implication. Lord Denning concluded that the acknowledgment of June 5, 1969, was the decisive document. It made it clear that the contract was on the buyer's terms, excluding Butler's price variation clause. Therefore, the appeal was allowed, and judgment was entered for the defendants.
This case is significant in contract law, particularly in the context of battles of forms in commercial transactions. It introduces a more flexible approach, emphasising the need to consider all documents exchanged between parties to determine the terms of the contract. The traditional offer and acceptance analysis is seen as potentially outdated in modern commercial practices involving standard form agreements.
